PQ Problem: Consider the 3-product (X,Y,Z), 5-station (A-E) example in the figure below:
Figure notes: Product X is sold 90$/unit and its weekly demand is 50 units. Product X manufacturing is started by processing two RM2 units in station A with ten minutes for each unit. One of them goes to station C and is processed for 15 minutes while the other one goes to station D for 15 minutes processing. Then, those materials are joined to each other in addition to an RM1 unit and are processed in station D for five minutes. Similar flows exist for Products Y and Z, which share some common components. For instance, a unit of the RM2 Ã A Ã D subassembly component of Product X can also be sent to station E for 10 minutes to be combined with another subassembly component to make Product Y.
Suppose there are 48 hours = 2880 minutes per week available on each station A thru, with one worker per station. Assume that all employees are salaried and weekly labor costs are charged at the rate of 10$/hour/station, and do not depend on the production quantities or labor utilization. Answer the following:
i. In the table below, calculate & fill in appropriate information such as the bottleneck ratios (enter their values into the appropriate row of the table). Use the bottleneck ratio method to prioritize products and to determine how many units of products X, Y, and Z should be produced each week. Calculate the resulting total weekly profit.
Bottleneck Station is _____________; It's max weekly workload is _______________________ minutes.
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Product
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X
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Y
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Z
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Unit Profit Margin (Gross Profit $/unit)
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Bottleneck Ratio
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Product Priority (1 = highest)
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Maximum Weekly Demand
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Production Quantity
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Total Weekly Profit (after incorporating weekly labor cost):
ii. Assume overtime is possible and can be run only on specific resources or stations. Based on the information provided in this question, would you recommend any overtime paid at 1.5 times regular rate (i.e., 1.5 x 10 = 15 $/hour, per worker, per station)? If so, how much overtime? If not, why not?